What does the future hold for the luxury market in Japan?

There has always been a paradoxical relationship between luxury and Japan, according to Pierre-Yves Donzé, Professor of Economic History at Osaka University. Indeed, for decades, Japan has been one of the largest luxury markets, accounting for nearly 9% of global sales of personal luxury goods in 2016. However, despite the country's long tradition of excellence in craftsmanship and its high number of luxury companies operating in the domestic market, these companies are not able to compete internationally. Indeed, only five Japanese companies (Shiseido Prestige, Pola Orbis, Onwards, Sanyo Shokai, Mikimoto) are listed in Deloitte's top 100 luxury companies.

In the last third of the 20^th century, the Japanese market for luxury experienced extremely high growth which made it the first non-western market showing such development. The increasing importance of the market had a huge impact on European luxury companies, forcing them to rethink their strategy and reorganise on the global scale.

The development of the luxury market in Japan can be divided into distinct phases. First of all, the 1970s were characterised by a high growth due to the shift from a basically non-existent market to one of the largest outlets for Western Luxury companies, thus playing an important role in the general growth of French luxury exports. Second, from 1980 to 1987, Japan’s importance was stagnating, but in a context of fast-growing nominal export, Japan supported this general expansion, becoming the largest market in 1990. The third phase represents the country’s heyday. From 1989 to 2004, it was the largest luxury market in the world with a share that peaked from 1997 to 2002 at 30.5 percent average. Finally, the fourth phase, starting in 2005, saw a decline of Japan’s share, however, it remains an important market for luxury goods today.

Scholars explain these phenomena by analysing the country’s social structure between the 1960s and the 1990s, which was characterised by having the world’s largest middle class with a high income. Others analysed cultural factors as a reason for the country’s high consumption of luxury. According to research, Japanese give prestige a higher importance than other cultures. They also are less individualistic, thus sharing the same type of good brings a feeling of togetherness.